The Crash of 1929, the Current Crisis and the Macro-Economic Adjustment in the Region

The current crisis is still unveiling and its broader regional reach and consequences are still unknown. What is known is that the impact is undeniable.

Even though the region has not experienced an immediate effect, its important to wonder how the macroeconomic adjustment may happen in our countries.
First of all, in the last years the region has experienced an improvement in its economic fundamentals, even though the external situation has dampened it, specially when compared to the rest of Latin America. This external effects are outside the reach of internal economic policy.

Indeed, if we make the theoretical abstraction that the economic fundamentals are visible in the current account, the balance of payments and the fiscal situation...

Fitch Ratings predicts that the world's major advanced economies will next year experience the steepest decline in GDP since World War II.

In aggregate GDP growth in these countries is expected to be (minus) -0.8% in 2009, compared to an estimated 1.1% for 2008. Tighter credit conditions, consumer retrenchment and falling corporate investment are expected to combine to deliver an unusually synchronised downturn across the advanced economies.

The sovereign rating B + with stable outlook is based on the "economic performance, low debt burden of the government, political stability and partnership between government and the private sector through dialogue".

From a statement issued by the Central Bank of Nicaragua:

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